Mexico Peso Fluctuates as Traders Weigh Fed, U.S. Retail Sales

Mexico’s peso swung between gains and losses as investors weighed speculation U.S. policymakers won’t take additional steps to boost growth this year against a retail-sales pickup in the Latin American country’s biggest trading partner.

The peso rose 0.1 percent to 12.6497 per U.S. dollar at 8:15 a.m. in Mexico City, from 12.6602 yesterday, extending its gain this year to 10 percent, the most among major currencies tracked by Bloomberg.

The Fed will announce its rate decision at 2:15 p.m. today in Washington. A Bloomberg News survey showed the best six months of job gains since 2006 have helped reduce the odds of a third round of asset purchases by the Fed this year. Retail sales in the U.S. rose in February by the most in five months, reflecting broad-based gains that indicate the world’s largest economy is picking up, Commerce Department figures showed today.

While the retail sales numbers had a “positive impact on risk appetite,” traders are hesitant to make big bets ahead of the Fed’s policy decision, said Eduardo Suarez, a senior currency strategist at Scotia Capital Inc. in Toronto. “Big events can have a big push in a certain direction so people try to enter as flat as possible.”

Sixty-one percent of respondents in a March 9-12 poll said Chairman Ben S. Bernanke will refrain from any action to expand the Fed’s $2.89 trillion balance sheet this year. In January, 50 percent of those surveyed predicted more bond buying.

Export Outlook

Mexican Finance Minister Jose Antonio Meade said last week in an interview at Bloomberg headquarters in New York that exports will probably climb from last year’s record high as demand from the U.S. strengthens. About 80 percent of Mexican goods sent abroad go to the U.S.

Mexican exports, which account for about 30 percent of the country’s gross domestic product, soared 17 percent last year to $350 billion. In 2011, Mexican output and exports of cars and light trucks hit a record, according to the nation’s Automobile Industry Association.

The yield on the country’s peso-denominated debt due in 2024 was little changed at 6.38 percent, according to data compiled by Bloomberg. The price fell 0.03 centavo to 131.49 centavos per peso.